BUS 475 Capstone Final Examination Part 1 and Part 2 (Combo) -
1. Mirabel Inc. has recently ventured into the home cleaning supplies market with its very own floor cleaner, Flofix, which does not contain any harmful chemicals such as phenol. The company has used aggressive marketing strategies and innovative advertising campaigns to promote the product. The company’s revenue analysis shows that the sales for the product are increasing steadily. However, when the market survey team of the company surveyed a large number of consumers in the target market, the consumers mentioned that they had not switched over to the new brand of floor cleaner.
Which of the following, if true, best explains how the sales for the company went up in spite of consumers not purchasing the product?
2. After a series of thefts in an organization, the management is considering whether or not to install cameras inside the office. The management is torn between violating the privacy of employees and preventing future thefts from taking place. This scenario illustrates an __________.
3. Colneith Corp. is a pharmaceutical firm that mainly produces drugs for Alzheimer’s disease. The Medical Association of Zachary Islands conducted a study on the effectiveness of the firm’s drugs and found that multiple dosages of drugs were fatal. This discovery would most likely lead to:
4. LaBelle, a famous cosmetic brand, introduces a new skin cleanser. The company pays bloggers to write positive reviews about the product. The consumers who follow these blogs assume that the bloggers are sharing their personal experiences and decide to try the product. They are unaware that the blogs are part of a marketing campaign. After a few days of using the product, they complain of rashes and allergies. The bloggers can be charged with __________.
5. Sam’s stores, a popular retail store, uses barcode scanners to scan each product that it sells. The data generated from the scanners are saved in a database. The database is updated every time a product is scanned and sold. This computer-based information system helps managers access and analyze sales data. Which of the following systems is the store using for its business?
6. The government of Seronia is deeply concerned about the rate of obesity in the country. It has framed a policy that requires food and beverage manufacturers to be taxed according to the sugar and fat content in their products. This will make high-sugar and high-fat products more expensive for consumers. The government believes that this policy will surely benefit the health of Seronian citizens.
Which of the following statements, if true, would undermine the government’s argument?
7. Kwalkon Computing released a new software update for their calendar app. The update synchronizes both personal and business calendars seamlessly. The update has all the relevant bug fixes and promises to make the app work faster. Since there have been no recent complaints about the software, the update must have solved all the customers’ issues.
Which of the following questions would be most relevant in evaluating the argument?
8. Zuckain Corp. has issued a 10-year coupon bond. The bond is issued at an annual coupon rate of 14%. The face value of the bond is $1,500, and the bond is currently trading at $1,232.56. Calculate the bond’s yield to maturity.
9. A shift in the demand curve for pretzels increases the price of pretzels from $1.25 to $1.75 and its quantity demanded from 30 million to 35 million. The price elasticity of demand for pretzels is _____.
10. Rosa Maria attends an interview for a sales manager position at Pixxels Inc. As part of the interview process, she is asked to reveal personal information. The company gets Rosa’s consent to share the information with a security company for background verification. Which of the following actions, if taken by the security company, will be unethical?
11. Dupon Inc., a leading manufacturer of handheld game consoles, decides to enter the global marketplace. It decides to sell its products directly in a foreign country. The foreign government denies permission to the company on the grounds of protecting domestic manufacturers. However, the government is willing to change its decision if the company contributes to local employment. Which of the following strategies of entering the foreign market will present the least risk to the company while also meeting the government’s condition?
12. FarmFresh Inc. partners with multiple retailers to sell its organic products. If stocks fall below a product’s threshold, the retail managers raise purchase orders to FarmFresh. It takes two days for FarmFresh to process the orders and dispatch the products. The process proves to be ineffective when the retail stores do not have the stock to meet a sudden increase in demand. How can supply chain management (SCM) systems solve this problem and make the process more efficient?
13. Mark is expected to receive $950 at the end of two years. Calculate the present value of this amount if the discount rate is 6%.
14. Rodriquez works as a scriptwriter in an advertising agency. He has been assigned the task of developing a script for a television commercial. He prepares a rough draft of the script and submits it to his manager, Carl. Carl reads the script but derives a different meaning from it than what Rodriquez intended. According to the basic communication model, which of the following will be the next step?
15. Irvin's Ice Creams, a popular chain of ice cream parlors present only in the United States, is looking for opportunities to grow its business. If the firm conducts a SWOT analysis of its performance, which of the following would be categorized as a threat?
16. Rikan Inc.'s credit sales for the year 2016 are $5,000,000, and its gross profit is $1,500,000. The company’s average inventories are $595,000. Its average accounts receivable is $750,000 and average accounts payable is $640,000. From this information, calculate the company’s cash cycle. (Round the answer to one decimal.)
17. When Ronike Ltd. decided to change its logo, it encouraged its employees to get involved in the decision-making process. Employees were asked to engage in brainstorming sessions by forming groups and working together in teams. Which of the following is a likely outcome of their teamwork?
18. Managing Director: Our business has expanded over the past couple of years. The profit margin and revenue earned have both gone up. On careful analysis of our client base, we have found that all of our clients belong to the same culture as us. They also hold ethical values that are similar to ours. Based on this finding, it would be best if our company stops training our employees on cultural sensitivity and instead gives our employees specialized training in market research analysis.
The Managing Director’s argument is flawed because it:
19. Calculate the net working capital from the information given below. The figures are in millions of dollars.
Cash and cash equivalents $ 90
Accounts receivable 255
Fixed assets 1,080
Short-term investments 145
Accounts payable 220
Long-term borrowings 660
Short-term borrowings 85
Interest payable 115
20. Cream & Fresh Ice Creams pays bloggers to write positive reviews about its ice creams. Readers who are interested in the product read these reviews and share the link with their friends who further share the reviews with more people. Some readers try the ice creams and add their own comments to the blog. Which of the following strategies is the company using to promote its products?
21. In 2005, Susana purchased a 7-year zero coupon bond for $967.23. The face value of the bond was $1,200. Calculate the capital gain on this bond in 2006.
22. Dupon Inc. is a leading manufacturer of handheld game consoles. Each console manufactured by the firm has a different game. Although the video game industry faced a sharp decline in demand with the introduction of mobile games, Dupon still holds a significant market share for handheld games compared to its competitors. To hold the market share, Dupon provides discounts to customers purchasing more than one console. Which of the following stages of the product life cycle is Dupon’s products going through?
23. Michael deposits $35,000 today in his bank account. Calculate the approximate amount he will have at the end of six years if interest is 10% per year and is compounded semiannually.
24. Five years ago, Rigatani Corp. introduced its new energy drink, Energize. According to recent market surveys, the product is in its decline stage. At the same time Energize was introduced, Panne Inc. introduced White Unicorn, another new energy drink. Therefore, White Unicorn must also be in its decline stage now.
25. In 2006, Dexel Electronics Inc. introduced audio systems in the market for electronic gadgets. Because of an increase in sales volume as well as a growing proportion of repeat purchasers, the company has now upgraded the old version of audio systems by introducing new features. Given this information, in which stage of the product life cycle does Dexel Electronics lie?
26. From the following information, calculate the net increase in cash.
Earnings before interest and taxes $52,000
Depreciation expense 7,800
Decrease in prepaid expenses 1,700
Increase in accounts receivable 12,880
Purchase of machinery 32,700
Payment of dividends 11,300
Increase in bank borrowings 8,600
27. Irvin's Ice Creams, a popular chain of ice cream parlors located only in the United States, is looking for opportunities to grow its business. Which of the following suggestions, if provided by the company’s marketing manager, would present the least amount of risk to the firm?
28. LaBelle, a famous cosmetic brand, introduces a new skin cleanser. Initially, the product does extremely well and reaps huge profits for the company. After using the product for few months, consumers having acne complain of rashes and allergies. An external chemical agency accuses that the company used a harsh chemical that causes allergies to people with acne, and it did not include it on the ingredients list displayed on the product’s label. These harsh chemicals did not cause allergies to people with normal skin. When enquired, the company’s CEO confesses that the products would have not done so well if they had listed the chemical. The company can be charged with __________.
29. Which of the following alternatives will give the lowest present value?
30. Marketers at Cream & Fresh Ice Creams update the company’s web site and online journals regularly with information about new ice creams. Readers who are interested in the articles updated on the company’s web site and online journals share the links with their friends who further share it with more people. Some readers try the ice creams and add their own comments to the web site and online journals. Which of the following strategies is the company using to promote its products?
31. TwissData Corp. is an electronics firm based in Damiya that manufactures motherboards. Because of a rapid growth in the personal computing industry, TwissData Corp. decides to produce personal desktops and laptops instead of motherboards. By doing so, which type of market-product strategy has TwissData Corp. applied?
32. Tony holds 350 shares of a company’s stock. At the end of 2015, the market price of each share was $32. During the year 2016, the company pays $2.25 in dividends per share. At the end of 2016, the company’s stock is priced at $39.50. Calculate the percentage return for holding the company’s stock during the year 2016. (Round the answer to one decimal place.)
33. Hailey's Food Inc. sells fish sticks at $3.00 a box. The government passes a law requiring sellers of food products to pay $0.50 as tax for each product they sell. Hailey's has to pay the government $0.50 for every box of fish sticks it sells. The company decides to trade down to compensate for the tax. Which of the following is a likely outcome of the company’s decision?
34. Calculate the cost of preferred stock from the information given below:
Annual dividend on preferred stock $ 13.50
Flotation cost 6.00
35. The owners of Brizzels’ Food Truck send live notifications to their customers when their truck is close to the customers’ locations. Their strategy was in response to a customer’s blog post about having to wait for long hours till the truck arrives. Which of the following strategies does this scenario illustrate?
36. The intensive 45-day training program for new employees at Zed Inc. requires trainees to take several tests that trainers at Zed Inc. have to grade. Recently, there has been a 30% increase in hiring. With the present number of trainers, it is not possible to finish grading all the tests in time.
HR manager: The training team should transfer all the tests for the trainees to software that will grade them automatically. Our hiring budget will not allow the hiring of additional people to manage the increased number of trainees. Using auto-grading software will not require any funds from our hiring budget.
Which of the following is assumed by the HR manager?
37. A popular hypermarket chain came under criticism for failing to protect the e-mail addresses and credit card details of 50,000 customers. CloudCom Inc., a web services company, identified that the lapse was because of a worm that had breached the hypermarket’s internal servers through an unauthorized e-mail, and that the anti-malware system failed to catch the worm. Which of the following actions should CloudCom take to restrict such malwares from entering the hypermarket’s internal network?
38. General Pharmacy’s stock has a beta of 1.8 and an expected return of 14%, and Sicoras Corp.’s stock has a beta of 1.5 and an expected return of 16.2%. Assuming capital-asset pricing model holds, calculate the return on the market portfolio.
39. The capital structure of Wilken Corporation is given below.
Calculate the weighted average cost of capital (WACC).
Preferred stock 15%
Common equity 50%
Additional details are as follows:
Bond yield to maturity 10%
Dividend of preferred stock $9.50
Price of preferred stock $100
Flotation cost of preferred stock $5
Dividend of common stock $2.00
Price of common stock $40
Growth rate of common stock 12%
Corporate tax rate 30%
40. Claudia is a team lead in an organization. One day at work, a team member, Marc, informs Claudia that he wants to speak to her about the problems that he faces at work. Marc tells her that he is being treated unfairly at work and that his colleagues often ridicule him because of his ethnicity. He goes on to say that his disturbed state of mind has caused a dip in the productivity and quality of his work. Claudia does not interrupt him when he is speaking and encourages him to talk openly. She also lets him know that she understands his situation and that his feelings are valid. In this scenario, Claudia is primarily engaged in __________.
41. Robert, an ardent blogger, is approached by the marketing manager of LaBelle, a famous cosmetic brand, to write positive reviews about the company’s products. Robert knows that the company’s products cause allergic reactions and to write positive reviews about the products would be unethical. Which of the following decisions will be considered an ethical lapse?
42. Truno Corp. plans to purchase new project management software. There are three available choices in the market: Telpro, Morse, and Verla.
Systems manager: I have compared the three available choices. All three choices are similar in quality, features, and usability. However, Morse is the most commonly used software, and it also has the lowest purchase price. Therefore, the best choice of project management software for us would be Morse.
Which of the following statements, if true, would strengthen the systems manager’s argument?
43. The current price of Latera Corporation’s common stock is $45 per share. The company expects to pay a dividend of $3.30 per share during the next year. The expected growth rate of the stock is 12%. Calculate the cost of equity using the constant-growth model.
44. Harry is receiving a loan of $3,000 from his friend to pay off some outstanding bills. The loan is structured in such a manner that the interest rate is 6% for the first year, after which the interest rate increases by 2% per year until the loan is paid. Calculate the amount that Harry will have to pay his friend if he waits for a period of four years to pay off the loan. (Round the answer to one decimal place.)
45. Managers at Hush Sports Inc., leading manufacturers of sports apparel, are contemplating manufacturing high-end maple baseball bats. To understand the existing demand for the product, the marketing managers decide to set an online campaign, promoting the product through blogs, videos, and interactive forums. Which of the following approaches should the company adapt in its campaign?
46. MaxSale, a popular supermarket, is approached by Hartane's, an organic food producer, to sell its products through the supermarket’s stores. MaxSale demands a substantial amount of money to display these products for a minimum duration. MaxSale uses this strategy to charge premium amounts to a select few producers as a means to reduce competition. By doing so, which of the following consumer rights is MaxSale violating?
47. Ricalta Inc. earns a total of $500,000 before interest and taxes. Its total debt is $1,110,000 (costing 5%). It has 150,000 shares of common stock at $5 per share. The firm is considering reducing its debt by $450,000 by issuing an additional 90,000 shares of common stock. The firm is in the 35 percent tax bracket. Its earnings before interest and taxes will remain the same as the new capital structure will not impact the firm’s operations. Which of the following will be a consequence of the change in Ricalta’s capital structure?
48. Hush Sports Inc., sellers of sportswear, transitioned from being just a brick-and-mortar store to an online marketplace for sports goods. Hush Sports still relied on customers to call the store for feedbacks or complaints. To speed up the process, the company updated its Web site with options for the customers to review the products they purchased. Positive reviews attracted more customers, and negative reviews helped the company improve its products. Which of the following strategies has Hush Sports included in its business process?
49. Sophie owns SugarCream bakery that produces 20 pastries in a day. The price of one pastry is $12. If she hires another worker, she will be able to produce 24 pastries in a day. Assuming that she operates in a competitive market and aims to maximize her profits, she decides not to hire the additional worker. Which of the following explains why Sophie did not hire the additional worker?
50. Marketing head of Tosel Inc.: Our company has been using an advanced CRM platform, Inito, which is popular among businesses for its sophisticated functionality. Inito allows us to store customers’ psychographic data as well as their recent shopping behavior. However, since we began using Inito, we have not been able to generate a significant greater number of leads. Clearly then, using CRM software does not help in generating any business.
Which of the following statements, if true, would weaken the argument above?